November 14, 2025
Making an offer in Bozeman can move fast, and one detail often decides who wins a home: earnest money. If you are unsure how much to put down, when it is due, or when you can get it back, you are not alone. A little clarity can help you write a stronger offer and avoid costly mistakes. In this guide, you will learn what earnest money is, how it works in Gallatin County contracts, and how to protect your deposit from contract to closing. Let’s dive in.
Earnest money is a good-faith deposit that shows a seller you are serious. You include it with your offer, and it becomes part of the purchase contract if the seller accepts. It is not your down payment. At closing, the deposit is credited toward your cash to close, or it is released as the contract directs if the sale does not close.
In competitive markets like Bozeman, sellers look closely at two things: the size of your deposit and whether it is refundable based on contingencies. A well-structured earnest money term can strengthen your offer without raising price.
There is no fixed amount in Bozeman. In many U.S. markets, deposits often range from a modest flat amount up to 1 to 3 percent of the purchase price. In hotter segments or at higher price points, buyers sometimes put down more to stand out. Local norms can vary by price tier and property type. Ask your agent for current guidance before you write.
Your contract will say when the funds are due. Many agreements require delivery within a short period after acceptance, often stated in business days. Deliver on time. Late delivery can be a default under the contract.
Who holds the funds matters. In Gallatin County, earnest money is typically deposited with a title or escrow company, or in a licensed broker’s trust account. Montana brokers must handle client funds under state rules, and title companies follow escrow procedures. Your purchase contract will name the holder.
Contingencies are conditions that must be satisfied for the sale to proceed. When used correctly, they can protect your earnest money. The key is timing and following the contract’s notice steps.
If you cancel within the inspection period and follow the contract’s procedure, your earnest money is typically refundable. If you remove or waive inspection rights and later back out without a contractual reason, the seller may have a claim to keep the funds.
If your loan is denied and you have a financing contingency, you generally preserve your right to a refund. You must give notice and any required documentation by the deadline. Keep lender letters in writing and submit them on time.
When an appraisal comes in low and you have an appraisal contingency, the parties often try to renegotiate. If you terminate as the contract allows because the appraisal gap cannot be resolved, the deposit is usually returned.
Title issues uncovered during the review period can justify termination and return of your deposit if you follow the contract’s objection and cure steps within the deadlines.
Some offers depend on the buyer selling a current home. These clauses involve more timing and documentation. Sellers often scrutinize these terms and may want firm deadlines or the right to accept backup offers.
You may see language in offers that calls the deposit non-refundable, or you might be asked to increase your deposit at certain milestones. These terms can make your offer more attractive to a seller, but they raise risk. Whether a deposit is truly non-refundable depends on the contract and the law that applies. Courts look at the agreement and whether the seller’s losses match the deposit.
If you agree to non-refundable language, make sure the contract clearly states when the seller can keep the funds. Vague terms invite disputes. Your agent can help you weigh the tradeoffs.
If a buyer breaches the agreement after removing contingencies, the seller may be entitled to the earnest money. Some Montana purchase contracts include a liquidated damages clause that treats the deposit as the agreed remedy if the buyer defaults. When such a clause is present and reasonable, it can be enforceable.
A seller can also pursue other remedies. Under certain circumstances, a seller may seek specific performance or damages beyond the deposit. Outcomes depend on the contract language and the facts. Clear deadlines, written notices, and good documentation matter.
Escrow holders generally keep the funds until they receive joint written instructions from both parties, or the contract’s release conditions are met. If the parties disagree, the escrow holder may ask for a mutual release or a court order. Some will file an interpleader action and let a court decide.
Many Montana purchase forms include dispute resolution steps, such as mediation or arbitration, before litigation. Check your contract. Good records are essential. Keep inspection reports, appraisal results, lender letters, and all notice emails.
Use this quick list when you prepare your offer in Bozeman:
When you review offers, look past price and weigh the deposit terms:
A clear earnest money plan can help your offer rise to the top while keeping your risk in check. Focus on three things. First, set a competitive amount based on current local norms. Second, use the right contingencies and track every deadline. Third, state exactly who holds the funds and how they can be released. When details are crisp, you avoid surprises and increase your odds of closing on the home you want.
If you are weighing deposit size or non-refundable terms, get tailored guidance. Our team blends local knowledge with careful contract handling, whether you are buying in town, near the university, or out on acreage. Ready to talk strategy for your next offer? Schedule a Consultation with Montana Life Real Estate.
Stay up to date on the latest real estate trends.
Real Estate
Elevate Your Mountain Living Experience with These Essential Tech Enhancements
Get assistance in determining current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact us today.